This blog details various ways to build up your savings and how my family does it in real life.

Thursday, April 15, 2010

Dissect Your Budget - Part 12 - Miscellaneous, Savings, and Wrap-up

Tip #249 - Dissect Your Budget - Part 12 - Miscellaneous, Savings, & Wrap-up. I"m going to wrap up this series today by talking about miscellaneous items and savings. Remember that you need to write up a budget that works for you. If you want to cover eating peanuts at a baseball game under entertainment, consider that cost when deciding on the budget amount for entertainment. If you want to consider it under the food item, then do so. Or it may happen so infrequently that you cover it under miscellaneous. If you are in schoool, you would have a line-item for tuition and books - broken out separately or combined, it doesn't matter. As long as everything is covered.

The miscellaneous category is often a catch-all for things you don't think about - like postage stamps or library fines. Bus as you use your budget more and more, the miscellaneous category should get smaller and smaller as you see a trend in items you spend. Parking meters costs can get wrapped into the transportation/auto line item. Postage stamps can get wrapped into entertainment or gifts if they are a regular occurance. Any non-regular, "surprise" expense can go in miscellaneous.

Lastly, let's talk about savings. To me, savings is one of the most important categories to have on your budget. Most people don't think to budget for savings. And because of that, people have very little saved. But if you budget $400 to spend on food and $200 for entertainment, why not have a budget for savings. Then each month you take that amount and put it away somewhere - into a savings account, money market fund, mutual fund or wherever you see fit. This savings category should cover your 401(k) savings, too as well as any IRA, education savings or other big ticket item savings you are doing.

And really my whole point of doing this dissect your budget series was to increase the amount of money that goes into your savings (or toward debt if you have any). So go through your budget with a fine-tooth comb. See where you can reduce your expenses and put more in your pocket.

In Real Life (IRL). My budget looks like this for 2010. Please note that thw two biggest categories in terms of amount after our mortgage is our IRA or retirement savings and our college education savings for our children.

To me, making sure that all of your expenses have a place on your budget is one of the most important rules of budgeting. That's why having a miscellaneous category is important to catch all those expenses you don't expect or forgot about. And secondly, having a budget allows you to set an amount that you are putting away for savings for retirement, for a home, for college, or for the future in some other way. Without having a line item for savings, you won't save! So dissect your budget, try to cut down on non-necessities or think of creative ways to make them cost less so you can increase the amount that goes towards savings. For other ideas on how to save money, check out Frugal Fridays.

About Me

I am a SAHM who has always been interested in putting away money, spending less, and looking for a cheaper way to do things. My husband and I hope to retire by the time we are 60.
I am currently 44 years old and have saved a substantial amount of money since I graduated from college 20 years ago. This was done by saving, careful managing of money, and wise investing. While I do have a finance degree, it certainly doesn't take one to accumulate money. The big key is to take in more than you let out. Join me here and I'll show you how!

Welcome to Saving Money Tips In Real Life (IRL)

This is where I give tips I have learned over the years on how to save money and how I have applied them in my life. There are no quick-rich schemes. Just common sense ideas on saving money, spending it wisely, and how it works in real life.

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